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Capital Market operators blame CBN over market downturn

17 February 2014, 16:01

Lagos - Some capital market operators on Monday blamed the Central Bank of Nigeria (CBN) for the sustained price depreciation of listed equities at the nation’s bourse.

They spoke in separate interviews in Lagos, noting that the CBN’s tight monetary policies impacted the market negatively.

They said that the investing public was seriously concerned over the liquidity squeeze foisted on the market by the bank’s policies.

 Emeka Madubuike, President, Association of Stockbroking Houses of Nigeria (ASHON), said that the association was not happy with the current market trend.

Madubuike said the CBN’s proposed increase of Cash Reserve Requirement (CRR) on the public sector to 100 percent has generated fear among operators.

He said that the development has created market instability and equity sell pressure.

 Madubuike, who is also the Managing Director of Compass Securities and Investment Ltd., said that the U.S. quantitative tapering contributed to the market’s instability with the exit of foreign investors.

 He said that the rapid exit of foreign investors and the attendant capital flight had made it imperative for active participation of more domestic investors' in the market.

According to him, the association will continue to map out strategies, aimed at increasing local participation and enhanced market stability.

Also speaking, Sehinde Adenagbe, Managing Director, Standard Union Securities Ltd., said that the market value creation was not encouraging.

Adenagbe attributed the downward trend in the market to CBN's issues bordering on CRR and developments at the international financial industry.

He said that banks were exiting the market in preparation for the CBN’s recent pronouncement on CRR.

Adenagbe added that scarcity of funds in the economy contributed to the development in the capital market.

He expressed his optimism that the market would likely rebound in the next couple of days.

David Adonri, the Chief Executive Office of Lambeth Trust & Investment, said that tight monetary policy would continue to slow down the equities market.

Adonri said that market regulators and operators needed to work together to enhance market liquidity and stability.

-          NAN

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